product management

1. Product Decisions

2. What is a Product?
• A product is anything that can be offered to a market to satisfy a
want or need, including physical goods, services, experiences,
events, persons, places, properties, organizations, information,
and ideas.
• A product is a bundle of benefits
• A Product is a set of solutions to solve customer problems

3. Five Product Levels

4. The Product and Product Mix
Product
Classifications
• Durability and
tangibility
• Consumer goods
• Industrial goods
• Nondurable
• Tangible
• Rapidly consumed
• Example: Milk
• Durable
• Tangible
• Lasts a long time
• Example: Oven
• Services
• Intangible
• Example: Tax preparation

5. The Product and Product Mix
Product
Classifications
• Durability and
tangibility
• Consumer goods
• Industrial goods
• Classified by
shopping habits:
• Convenience goods
• Shopping goods
• Specialty goods
• Unsought goods

6. The Product and Product Mix
Product
Classifications
• Durability and
tangibility
• Consumer goods
• Industrial goods
• Materials and parts
• Farm products
• Natural products
• Component materials
• Component parts
• Capital items
• Installations
• Equipment
• Supplies and business
services
• Maintenance and repair
• Advisory services

7. The Product and Product Mix
• Product mix dimensions:
• Width: number of product lines
• Length: total number of items in mix
• Depth: number of product variants
• Consistency: degree to which product lines are related

8. New Product Development
• What is a “New” Product?
• New-to-the-world products
• New product lines
• Additions to existing product lines
• Improvements and revisions of existing products
• Repositioned products
• Cost reduction products

9. New Product Development
• New Product Failure is Rampant:
• 95% of new U.S. consumer products
• 90% of new European consumer products
• Reasons for failure include ignoring
unfavorable market research, overestimating
market size, marketing mix decision errors, and
stronger than anticipated competitive actions

10. New Product Development
• Successful new products:
• Offer a strong relative advantage
• Reflect better understanding of customer needs,
and beat the competition to market
• Exhibit higher performance-to-cost ratios and
higher contribution margins
• Are launched with larger budgets
• Have stronger top management support

11. Managing New Products
• Idea generation
• Idea screening
• Concept
development
• Concept testing
• Marketing strategy
development
• Business analysis
New Product Development Process:
Ideas to Strategy

12. Managing New Products
• Product development
• Market testing
• Commercialization
New Product Development Process:
Development to Commercialization

13. Consumer Adoption Process
• Adopters of new products move through five
stages:
• Awareness
• Interest
• Evaluation
• Trial
• Adoption

14. Consumer Adoption Process
• People adopt new products at different rates
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards

15. Consumer Adoption Process
• Five product characteristics influence the rate of
adoption:
• Degree of relative advantage
• Degree of compatibility
• Degree of complexity
• Degree of divisibility (trialability)
• Degree of communicability

16. Marketing Through the
Product Life Cycle
• Five product characteristics influence the rate of
adoption:
• Degree of relative advantage
• Degree of compatibility
• Degree of complexity
• Degree of divisibility (trialability)
• Degree of communicability

17. Stages of the Product Life Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Low sales
• High costs per customer
• Negative profits
• Innovator customers
• Few competitors

18. Stages of the Product Life Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Rising sales
• Average costs
• Rising profits
• Early adopters customers
• Growing competition

19. Stages of the Product Life Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Peak sales
• Low costs
• High profits
• Middle majority customers
• Stable/declining
competition

20. Stages of the Product Life Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Declining sales
• Low costs
• Declining profits
• Laggard customers
• Declining competition

21. Objectives and Strategies for the Product Life
Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Objective: to create awareness and
trial
• Offer a basic product
• Price at cost-plus
• Selective distribution
• Awareness – dealers and early
adopters
• Induce trial via heavy sales promotion

22. Objectives and Strategies for the Product Life
Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Objective: maximize market
share
• Offer service, product
extensions, warranty
• Price to penetrate
• Intensive distribution
• Awareness and interest –
mass market
• Reduce promotions due to
heavy demand

23. Objectives and Strategies for the Product Life
Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Objective: maximize profit
while defending market share
• Diversify brands/items
• Price to match or beat
competition
• Intensive distribution
• Stress brand differences and
benefits
• Increase promotions to
encourage switching

24. Objectives and Strategies for the Product Life
Cycle
PLC Stages
• Introduction
• Growth
• Maturity
• Decline
• Objective: reduce costs and
milk the brand
• Phase out weak models
• Cut price
• Selective distribution
• Reduce advertising to levels
needed to retain hard-core
loyalists
• Reduce promotions to
minimal levels